Week in Review for 4/14/14 through 4/18/14

Illinois TaxesHouse Republicans launch petition drive against tax hike. On the heels of what might prove to be the first in a long line of tax increase votes, Illinois House Republicans are launching an online petition drive against the effort to make the Illinois temporary tax increase of 2011 permanent.

“What Illinois needs right now are leaders committed to creating jobs, not running them out,” said House Republican Leader Jim Durkin. “What we have instead is an assault on the taxpayers of Illinois in the form of numerous and continued attempts to raise taxes. This has to stop.”
On January 11, 2011 Illinois Democrats raised the state income tax by 67% during a lame duck session in what sponsors claimed would be a short term solution to paying Illinois’ bills. Three years later, Illinois continues to carry nearly $7 billion in unpaid bills while struggling with one of the highest unemployment rates in the nation at 8.4%.

Earlier this session, Republicans signed on to HJR 80, unanimously supporting the revenue estimate of $34.5 billion, putting Illinois in a position to allow the tax increase to expire. Despite this spending limit, Illinois Democrats have proceeded to introduce multiple tax proposals seeking to increase revenues beyond this spending authority.

Leader Durkin insisted we should shift focus to job creation.

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“We stand for the 570,000 unemployed Illinoisans and countless others who are underemployed,” added Durkin. “We stand for the taxpayers who are tired of their hard-earned money being yanked out of their pockets and who are finding it harder and harder to buy groceries, to fill their gas tank, and send their children to college to preserve their American dream. The only way to get out of the mess we are in is to grow our economy – not raise taxes.”

Chicago – Neighborhood Recovery InitiativeHouse approves additional investigation of troubled Chicago program. The Illinois House approved a deeper investigation of state moneys allocated to Governor Quinn’s community anti-violence programs. The resolution, sponsored by Rep. David Reis, calls upon the Illinois Auditor General to examine the program’s spending practices, hiring procedures, and compliance with applicable state laws and regulations.

“Quinn’s $54 million taxpayer-funded Neighborhood Recovery Initiative (NRI) was used to influence Chicago politicians and drive voters to the polls on Election Day,” Reis said. “The Auditor General’s report exposed questionable spending practices, ethical violations and exertion of political influence in directing the expenditure of state tax dollars. The NRI audit was ultimately referred to the U.S. Attorney General for further review of potential criminal violations.”

Reis stated the Illinois House approved an additional audit last week, “to further investigate how and where taxpayer funds are being spent on Quinn’s community anti-violence programs in recent years.”

House Resolution 888 directs the Auditor General to conduct a performance audit of State moneys provided through the Illinois Criminal Justice Information Authority to all community based violence prevention programs, after school programs, and the Chicago Area Project, under contracts or grant agreements in Fiscal Year 2013 and Fiscal Year 2014.

Reis continued, “Quinn’s reckless spending practices have been well documented. This audit, conducted by the Illinois Auditor General, will hold Quinn and his administration’s feet to the fire on how and where they’ve spent taxpayer dollars. The citizens of Illinois deserve honesty and transparency on where state resources are going especially in light of our challenging budget year.”

The Auditor General stated the $54.5 million NRI program was “hastily implemented” with “pervasive deficiencies in Illinois Violence Prevention Authority's (IVPA) planning, implementation and management.” The IVPA was disbanded in Fiscal Year 2013 and the NRI programs were put under the direction of the Illinois Criminal Justice Information Authority.

Chicago – PensionsNo final action yet on Chicago pension reform bill. SB 1922 was sent to the Governor on April 10th. Agreed to by the City of Chicago and by some, but not all, of the relevant labor unions that represent affected city employees, the bill makes changes to the benefit package to be paid to many city workers after their retirement. Key readjustments by SB 1922 to the formula used to generate compounding Chicago pension payouts over time parallel (but are not identical to) the pension reforms enacted by the General Assembly for many teachers and State workers in December 2013 as part of SB 1.

Debt rating firms, pointing towards Chicago’s significant burden of unfunded pension liabilities and declining debt status in global financial markets, had called for urgent pension reform action to stabilize the troubled financial condition of Illinois’ largest city. However as of Thursday, April 17, seven days after SB 1922 was sent to the Governor, the bill had not been signed into law.

BudgetComptroller Judy Baar Topinka tracks $6.7 billion in unpaid bills. The multi-billion-dollar backlog of unpaid bills owed by Illinois to its creditors, including providers of medical care and services, continues. According to the most recent issue of Comptroller Topinka’s “Monthly Money Matters,” the current unpaid bill backlog totals nearly $6.7 billion. The figures reported by Comptroller Topinka summarize the State’s fiscal position as of March 31, 2014.

Many tax receipts, including Illinois income and sales taxes, continue to respond positively to current economic trends. On the other hand, other taxes are generating declining income. Illinois inheritance tax (aka “death tax”) revenues are declining year to year.

The Comptroller’s ongoing monitoring of cash flows in and out of State coffers show that State general funds on hand on March 31 totaled $169.4 million, which failed to balance $4,459.3 million in unpaid bills presented to the Comptroller’s office for payment. The Comptroller had less than four cents on hand for every dollar of bills waiting for payment. In addition to this $4.5 billion in unpaid Comptroller bills, Topinka reports that other State agencies know of approximately $2.2 billion in additional billings on file and not yet presented to the Comptroller’s office for payment.

Energy – FrackingMore than 35,000 comments made to Department of Natural Resources. In November 2013, the Department of Natural Resources (DNR), the State agency charged with responsibility for overseeing Illinois shale drilling, published a packet of proposed fracking rules. These rules are required to cover the safe disposal of the chemicals used in the fracking process and minimize the impact upon local residents in areas that lie over the shale beds that will be drilled. Production of Illinois shale oil and gas will be minimal until these rules are in place and permits issued based on the rules. Until valid permits can be issued, oil and gas production engineers (and their employers) would be vulnerable to legal actions for damages in which the lack of a valid permit would be one of the elements of the lawsuits.

The proposed DNR fracking rules were published on First Notice to give interested Illinoisans an opportunity to read and comment on them. Comments had to be submitted before January 3. DNR is required to digest the comments and is authorized (not required) to make changes to the rules to reflect those concerns it considers legitimate. The Department reports having received more than 35,000 separate responses during the comment period, many of which appear to be from individuals and groups strongly opposed to Illinois fracking. Fracking was legalized in Illinois in Public Act 98-22 (SB 1715), enacted in spring 2013.

Energy – Petcoke Negotiations continue on key energy resource. Petroleum coke (petcoke) is a carbon-based byproduct of the petroleum refining process which is often sold for use as fuel and as an input in a variety of manufacturing processes. Petcoke has been sold and transported throughout Illinois for over 70 years under the regulatory authority of the Illinois Environmental Protection Agency (IEPA) and Illinois Pollution Control Board (PCB). In late 2013, Gov. Quinn proposed strict emergency rules to further regulate petcoke storage facilities statewide. These emergency rules were rejected by the PCB in January.

HB 5939 largely mirrored the failed emergency rules; the bill did not advance in the House. Members of the petroleum industry and business community argue that the laws currently in place to regulate petcoke storage and transfer are more than sufficient, and any further regulation would be detrimental to the business climate in Illinois. Stakeholders are meeting with the goal of contributing to further General Assembly discussion of this issue prior to adjournment of the 2014 spring session.

GamblingHearing on gaming expansion in Chicago. The House Executive Committee held a subject-matter hearing on gaming expansion on Wednesday, April 16 in Chicago. Proponents of new gaming opportunities included advocates for slots/video gaming at horse racing casinos and dock advocates for possible future licensed riverboat casinos in Danville, Rockford, and the southern suburbs of Chicago.

Proponents of gaming expansion pointed to estimates of new jobs that could be created by expanding new opportunities for gaming in Illinois, while opponents expressed concern that money spent by customers on gaming slots would be subtracted from other consumer spending and would not create new economic growth. Hearings are expected to continue in anticipation of a possible major gaming expansion bill prior to the May 2014 adjournment deadline, with observers continuing to look for a renewed push for a Chicago casino.

Local GovernmentNew pension crisis assails non-Chicago local governments statewide. Separate from other troubled pension benefit programs of Illinois are the benefits earned by non-educational employees of Illinois units of local government. Many of these workers are employees of local municipalities and their pensions, administration by the Illinois Municipal Retirement Fund (IMRF), have up to now been seen as relatively secure and stable.

The combination of historically low interest rates, generous retirement benefits promised to local police officers and firefighters, and lengthening life expectancies are in the process of creating a challenge similar to the crisis assailing the pension funds of Illinois school teachers and educational professionals, state workers, and Chicago/Cook County workers. The nine largest cities in Illinois after Chicago have recently reported a combined $1.5 billion in unfunded debt to the pension systems slated to pay benefits to public safety workers. An Associated Press story on this issue can be found here.

Public Health – Home BakingCupcake bill baked by House, hopes for frosting in Senate.HB 5354, sponsored by Rep. Charlie Meier, was unanimously approved by the House on Thursday, April 10. It responds to the plea of Chloe Sterling, an 11-year-old pastry chef, that she be allowed to continue making artisanal cupcakes and selling them for $2 each to customers.

County public health officials, exercising what they believed to be their duty to crack down on unlicensed food supplies, had closed the aspiring businesswoman’s oven door. The issue was discussed on the Rachael Ray Show.

HB 5354, compromise language worked out in the House with the help of public health professionals, provides that in the future, a local government with direct jurisdiction over the address of the home kitchen will have the right to enact an ordinance to allow the home food preparation activity. If an ordinance is adopted, the home kitchen will be allowed to prepare and sell a limited quantity of baked goods; however, local health officials will continue to have the right to inspect a kitchen if there is a health complaint or an outbreak of disease.

State GovernmentDemocrats broke House Rules to advance Obama Library. In a stunning violation of House Rules, Illinois House Democrats used a subject matter hearing to advance legislation aimed at steering $100 million in public funds towards luring the Obama Presidential Library to Chicago.

“The legacy of the Obama Presidential Library shouldn’t be kicked off in a cloud of controversy,” stated Rep. Ed Sullivan, Republican Spokesman of the House Executive Committee. “Not only was the meeting a misrepresentation, so was the false roll call taken.”

Sullivan was speaking specifically to the Executive Committee vote Thursday on HB 6010. The legislation was brought up in what appeared as a subject matter hearing only, meaning testimony was to be taken, but no votes were to be cast. At the meeting, only four of the committee’s eleven members were present.

Without a quorum present, and no Republicans to hold the rules accountable, the four present Democratic members claimed the committee roll call to be 9-0 (9 voting “yes” and 0 voting “no”) on the proposal, with even opposing Republicans not in attendance recorded as “yes” votes.

“The roll call appears to be unequivocally out of order. It is often the case that the majority party in Illinois will simply change the rules to get what they want accomplished,” added Sullivan. “In this case they didn’t even care to change the rules; they just flat out broke them.”

Under current House Rules, a committee cannot vote on measures unless a quorum is present and the proper posting requirements have been met. Under a parliamentary review, the following Rules were violated: Rule 32 providing a majority of those appointed constitute a quorum of a committee; Rule 21 authorizing actions by recessed committees but requiring the House to be in session; and Rule 49 providing that no member of a committee may vote except in person at the time of the call of the vote.

The Illinois House does not reconvene regular session until April 29th. It remains unclear at this point what action will be taken on House Bill 6010, but House Republicans intend to object to the advancement of this legislation.